ACEP ID:
1. Will the revisions to the E/M Guidelines apply to observation services?
2. Are the E/M codes for Observation services changing for 2023?
3. What codes will be used to report observation in 2023?
4. What are the descriptions for the Initial Hospital Inpatient or Observation Care code 99221-99223?
5. What are the descriptions for the Subsequent Hospital Inpatient or Observation Care - 99231-99233?
6. What are the descriptions for the Hospital Inpatient or Observation Care Services, Same Day Admission and Discharge - 99234-99236?
7. What codes are used to report discharge from Observation?
8. What is included in the discharge from observation E/M code?
Discharge codes 99238/99239 are to be used to report the total time spent by the physician/QHP for services rendered on the date the patient is discharged from observation.
9. Are there any special guidelines to follow when reporting Same Day Admission and Discharge codes 99234-99236?
10. What is the Medicare “8 to 24 Hour Rule?”
Hospital Length of Stay |
Discharged On |
Code(s) to Bill |
< 8 hours |
Same calendar date as admission or start of observation |
Initial hospital services only |
8 or more hours |
Same calendar date as admission or start of observation |
Same-day admission/discharge |
< 8 hours |
Different calendar date than admission or start of observation |
Initial hospital services only |
8 or more hours |
Different calendar date than admission or start of observation |
Initial hospital services + discharge day management |
11. Does the “8 to 24 Hour Rule” rule apply to all payers or only Medicare?
The “8 to 24 Hour Rule” is a CMS policy; other payers may set their own payment policies. Of course, providers must follow the policies of only those payers with whom the provider must comply because of statute, regulation, or contract. In the absence of any contrary policy, CPT coding principles pertain. CPT does not publish an 8-hour minimum time for Observation to report 99234-99236 and allows the billing of a discharge code (99238 or 99239) if the service crosses midnight without a minimum time threshold. (See FAQ 23)
12. What are the total RVUs for the 2023 observation codes compared to the old observation codes?
99218 |
Initial observation care |
2.83 |
99221 |
Initial inpt/obs care |
2.46 |
|
99219 |
Initial observation care |
3.83 |
99222 |
Initial inpt/obs care |
3.85 |
|
99220 |
Initial observation care |
5.17 |
99223 |
Initial inpt/obs care |
5.13 |
|
99224 |
Subsequent observation care |
1.13 |
|
99231 |
Subsequent inpt/obs care |
1.47 |
99225 |
Subsequent observation care |
2.05 |
99232 |
Subsequent inpt/obs care |
2.34 |
|
99226 |
Subsequent observation care |
2.92 |
99233 |
Subsequent inpt/obs care |
3.52 |
|
99234 |
Observ/hosp same date |
3.77 |
99234 |
Inpt/obs same date |
2.92 |
|
99235 |
Observ/hosp same date |
4.78 |
|
99235 |
Inpt/obs same date |
4.17 |
99236 |
Observ/hosp same date |
6.12 |
|
99236 |
Inpt/obs same date |
6.18 |
99217 |
Observation care discharge |
2.07 |
99238 |
Inpt/obs care discharge |
2.38 |
|
|
|
|
99239 |
Inpt/obs care discharge |
3.37 |
13. What are the total RVUs for the 2023 observation codes compared to the 2023 RVUs for the ED codes?
E/M |
Description |
2023 RVU |
E/M |
Description |
2023 RVU |
|
99281 |
Emergency dept visit |
0.35 |
99221 |
Initial inpt/obs care |
2.46 |
|
99282 |
Emergency dept visit |
1.24 |
99222 |
Initial inpt/obs care |
3.85 |
|
99283 |
Emergency dept visit |
2.13 |
99223 |
Initial inpt/obs care |
5.13 |
|
99284 |
Emergency dept visit |
3.58 |
|
99231 |
Subsequent inpt/obs care |
1.47 |
99285 |
Emergency dept visit |
5.21 |
99232 |
Subsequent inpt/obs care |
2.34 |
|
|
|
|
99233 |
Subsequent hospital care |
3.52 |
|
|
|
|
99234 |
Inpt/obs same date |
2.92 |
|
|
|
|
|
99235 |
Inpt/obs same date |
4.71 |
|
|
|
|
99236 |
Inpt/obs same date |
6.18 |
|
|
|
99238 |
Inpt/obs care discharge |
2.39 |
|
99239 |
Inpt/obs care discharge |
3.39 |
14. What are some diagnoses or patient presentations that may benefit from an observation stay?
15. An example of an observation case in the emergency department would be as follows:
A patient presents to the emergency department with nausea, vomiting, and diarrhea. After a medically appropriate history and examination, preliminary impressions of gastroenteritis and dehydration are made. The patient has an IV started, and an antiemetic was given. The patient is hydrated intravenously. When appropriate PO fluids are trialed. The patient continues to be observed until their symptoms improve and they have demonstrated the ability to hold down liquids. After discharge instructions are given, the patient is discharged to follow up with their PCP in a few days or return to the emergency department if symptoms recur.
Other examples of patients who may qualify for Observation services in the ED include:
Examples of cases where coding Observation services would generally not be indicated:
16. What documentation is required to assign the inpatient/observation codes for physician services?
17. Can observation codes be used in the ED even if the patient is in a regular ED bed and not in a special bed or an observation unit?
18. Can our medical group bill for ED services and observation services when two different physicians are involved?
CPT policy has been revised for 2023. Per CPT, “When the patient is admitted to the hospital as an inpatient or to observation status in the course of an encounter in another site of service (e.g., hospital emergency department, office, nursing facility), the services in the initial site may be separately reported. Modifier 25 may be added to the other evaluation and management service to indicate a significant, separately identifiable service by the same physician or other qualified health care professional was performed on the same date.”
However, while the CPT policy has changed, the CMS policy has not. Per CMS, “We also propose, however, to retain our current policy that when a patient is admitted to outpatient observation or as a hospital inpatient via another site of service (such as hospital ED, physician’s office, nursing facility), all services provided by the physician in conjunction with that admission are considered part of the initial hospital inpatient or observation care when performed on the same date as the admission. (Refer to the Medicare Claims Processing Manual, IOM 100-04, Chapter 12, 30.6.9.1.A.) This policy differs somewhat from the instructions provided in the 2023 CPT Codebook.”
In keeping with existing Medicare policy, if both physicians are of the same specialty, in the same group, generally either an ED service 99281-99285 or observation may be billed, but not both.
If the patient is evaluated in the ED and admitted to observation after midnight, it might be proper to code both in some circumstances.
19. What if I performed a procedure in the ED and then admitted the patient to observation? Can I assign the procedure code in addition to the appropriate observation code? Are there any procedures that are "bundled" into observation, as in critical care? Are there any problems if the procedure had a "global period" by CMS definition?
20. Can observation codes be selected based on time?
Yes, the Inpt/Obs codes have time as part of the code descriptor. The E/M code can be assigned based on Medical Decision Making or Time. To report Inpt/Obs E/M codes based on time, the physician/QHP must document their total time and satisfy the times specified in the code descriptors to report the E/M code.
Time included is the total time on the date of the encounter. It includes both the face-to-face and non-face-to-face time personally spent by the physician on the day of the encounter (includes time in activities that require the physician and does not include time in activities customarily performed by clinical staff).
Calculating the physician’s time includes the following activities when performed:
Time spent performing separately billed services, travel time, and teaching that is general and not limited to discussion required for the management of a patient is not counted toward the time used to select the E/M code.
21. How much time is required for each Inpt/Obs E/M code?
2023 Obs Codes |
2023 CPT Time |
|
99221 |
Initial inpt/obs care |
40 minutes must be met or exceeded. |
99222 |
Initial inpt/obs care |
55 minutes must be met or exceeded. |
99223 |
Initial inpt/obs care |
75 minutes must be met or exceeded. |
99231 |
Subsequent inpt/obs care |
25 minutes must be met or exceeded. |
99232 |
Subsequent inpt/obs care |
35 minutes must be met or exceeded. |
99233 |
Subsequent Inpt/Obs care |
50 minutes must be met or exceeded. |
99234 |
Inpt/Obs same date |
45 minutes must be met or exceeded. |
99235 |
Inpt/Obs same date |
70 minutes must be met or exceeded. |
99236 |
Inpt/Obs same date |
85 minutes must be met or exceeded. |
99238 |
Inpt/obs care discharge |
30 minutes or less on the date of the encounter |
99239 |
Inpt/obs care discharge |
more than 30 minutes on the date of the encounter |
22. Is there a way to capture observation services that are much longer than usual?
Time spent performing separately reported services other than the primary E/M service and prolonged E/M service is not counted toward the primary E/M and prolonged services time.
23. Does CMS have any additional rules for reporting Prolonged Observation Services?
24. What is the Two-Midnight Rule, and how does it affect Observation services?
On October 30, 2015, CMS (Medicare) released the final rule for OPPS updates to the "Two-Midnight" rule for physicians to use in determining patient admission status for inpatient or outpatient care under the Inpatient Prospective Payment System for hospitals. CMS stipulates that when a physician anticipates the patient will require care that crosses two midnights and orders inpatient admission based upon that expectation, inpatient status is generally appropriate. At this writing, time spent in Observation or other Outpatient status via an Emergency Department encounter may be retroactively combined with inpatient status to reach the two-midnight Inpatient threshold. https://www.cms.gov/newsroom/fact-sheets/fact-sheet-two-midnight-rule-0
25. Can Observation Status be used for psychiatric patients in the Emergency Department?
Yes, see the Mental Health FAQ for more information.
26. Are there additional or different factors to consider when reporting Observation for facility coding?
To better appreciate the characteristics distinguishing facility coding from physician coding for Medicare Observation services, see ACEP's FAQs on OPPS/APCs and the Facility Observation FAQ.
Updated November 2022
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